University of Kansas Health System Series 2019A Tax-Exempt Fixed Rate Bonds
$93,000,000 Series 2019A Tax-Exempt Fixed Rate Bonds
University of Kansas Health System
The University of Kansas Hospital Authority (“KUHA”) is a Kansas nonprofit corporation organized to own and operate the University of Kansas Hospital (the “KU Hospital”). The mission of KUHA is to improve the health of Kansans and to provide patient care in specialized services not widely available elsewhere to citizens of the State of Kansas. KUHA has operating revenues of $2.4 billion. The KU Hospital is the flagship hospital for the University of Kansas Health System (“UKHS”), providing tertiary and quaternary care in the Kansas City metropolitan area and throughout its regional service area. UKHS cared for patients from all 105 Kansas counties, 107 of 114 Missouri counties, and served patients from all 50 U.S. states in fiscal year 2018. KUHA operates patient care facilities throughout the Kansas City metropolitan area, including cancer centers; imaging, lab and pharmacy locations; urgent care clinics; primary and specialty care clinics; as well as acute care facilities that are licensed for 970 beds.
Comparable Bond Sales
Focus on Value
Ponder served as financial advisor to the University of Kansas Health System (“the System”) for its Series 2019A Revenue Bonds.
The 2019A Bonds, will be used to finance the construction of a new Strawberry Hill Campus, which is being developed to increase mental and behavioral health services in a full-scale facility. The bonds are also being used to provide for renovations at the Main Campus and for the three-floor expansion of the Main Campus Medical Office Building. The project is estimated to be completed in Fall 2019. The 2019A bonds will also be used to reimburse the System for prior capital expenditures related to the projects.
Due to the smaller size of the serial bonds in the shorter term maturities, subscription was light with some maturities undersubscribed and others seeing 2-4x oversubscription. Ponder recommended that the 30-year term bonds be bifurcated by coupon to provide investors with options and create as much demand as possible. This bifurcated coupon structure also helped to lower overall borrowing cost for KUHA and compares favorably to other issues in the market of comparable credit quality. The strategy worked well as over 30 institutional investors participated in the bond sale. The 5% coupons were oversubscribed by 1.6x and the 4% coupons slightly undersubscribed.
UKHA was able to achieve a TIC of 4.21%
Credit Ratings: NR/AA-/AA-Download Full Article